The Real Danger of the IRS, DOJ 'Scandals'

The IRS and DOJ scandals are already old news, but everyone seems to misunderstand their significance.

The machinations of the IRS went something like this: Sometime last year, several middle to low level workers at the Cleveland, Ohio office of the Internal Revenue Service started taking special interest in conservative political groups applying for tax exempt status. They looked for organizations with the words "Tea Party" or "Patriot" or "the Constitution" and, as the New York Times reported, sent them--and, it appears, them alone--detailed questionnaires to probe their political leanings, affiliations, and plans.

At the same time, the DOJ was investigating national security leaks to reporters. As part of that investigation, it sent a subpoena (or subpoenas) to phone companies to seize the records of at least 20 phone lines used by the Associated Press and several others at FOX News. The AP called the actions "overzealous" and "unconstitutional;" others went further, calling the DOJ's behavior part of a "pattern of cover-ups."

Republicans and conservatives are positively giddy at the apparent opportunity to tie the President to these "scandals," hoping to claim some skin in the game, or at least a political victory. But there is no evidence that the President knew. In fact, there is every evidence that these decisions were made at lower administrative levels and were kept out of the President's world.

That means that these "scandals" -- not to mention the Benghazi tragedy -- don't have legs in the traditional sense, like Watergate or even the Monica Lewinsky affair. They are not about what the President knew and when. They don't involve the President, or anyone close to him, lying. Nor are they about some sinister Administration plot to target enemies.

But they may damage the Administration, the Democratic Party, and modern progressivism in a more subtle way.

The Obama Administration stands for many things. To the gay community and many other minority groups, it stands for equality and the realization of the American dream of inclusion. On a slightly broader scale, the President has been making one other major argument against his conservative Republican and Tea Party opponents: that the national government can be used to solve national problems. Government can be smaller, it need not be bloated, and it doesn't require a huge military-industrial complex. But government can solve problems, like immigration injustices, financial instability, health care, and so on.

For that argument to work, government has to function properly. Consider, for example, the mechanisms set up by the Affordable Care Act, colloquially known as Obamacare. It sets up health care plan exchanges and hands out subsidies to low-income individuals and includes a system of oversight. The Dodd-Frank regulations of Wall Street, which are supposed to prevent another financial collapse, set out basic guidelines and requirements, but like Obamacare, leave much regulation-writing to the administrative agencies tasked with enforcing the laws.

There's nothing inherently wrong with that; that's often how regulation works: Congress sets out the goals, administrative agencies dig into the details. But when those administrative agencies step out of bounds, we cannot help but question the "good" part of good government.

For those of us who join the President and believe that good, efficient government can help solve large social problems, government failures, even when not part of some sinister plot, are dents in the armor. They remind us what can happen when we set up independently functioning and large bureaucracies that can run amok in a proto-Kafkaesque manner. They give anti-government libertarians goose bumps and challenge the theme that President Obama has been using since his election to the United States Senate from Illinois: that government works.

Government can work. The IRS doing its job inartfully and the DOJ investigating leaks by going after journalists is not the beginning, middle, or end of Kafka's senseless bureaucracy taking control of our lives. Radical libertarians and politically opportunistic conservatives fall victim to paranoia, at worst, or the slippery slope fallacy, at best, when they state otherwise. The response to these "scandals" is not to give up on government, but to fix it.

We can make government regulations simpler, which was one of the President's goals when he came into office in 2008.

We can tighten up the tax exempt status provision that appears to allow highly politicized groups to enjoy benefits intended for non-political, social welfare organizations.

We can reform the tax system in a so-called "grand bargain" that has seemed beyond the reach of an intractable Republican House.

We can do a lot of things. What do you think we can do to solve this problem?

***

Ari Ezra Waldman is the Associate Director of the Institute for Information Law and Policy and a professor at New York Law School and is concurrently getting his PhD at Columbia University in New York City. He is a 2002 graduate of Harvard College and a 2005 graduate of Harvard Law School. Ari writes weekly posts on law and various LGBT issues.

Comments

I say if a group is associated with politics OR religion, no tax-exempt status. The church wants to help hungry people? Well someone can announce a real group to the congregation -- a group solely devoted to feeding the community, not pushing a 2000-yr-old book, not "moral living". Many churches today seem more preoccupied with keeping their buildings heated than in feeding anyone, IMHO. And attending nice potluck suppers and weekend retreats rather than visiting the sick. Oh, and telling people acting on our gayness is sinful.

Posted by: Jude | May 22, 2013 11:18:49 AM

What a bunch of self serving piffle.

Obama had the White House and both houses of Congress and failed to pass a Single Payer healthcare system. Instead, we have Obamacare which is arguably the worst of both worlds. I understand that that could be part of the strategy. In fact, I tell conservative cranks (a remarkable number of whom don't see the connection between their government or military healthcare and "socialized medicine") that before this is over they will be begging for SIngle Payer.

Obama and the Democrats sold us out to insurance companies. The insurance companies have known for 50 years that the gravy train would come to a halt, but they just couldn't wean themselves from the nipple of healthcare cash flow.

"Republicans do it to." is not an acceptable defense for what Obama and the Democrats have failed to do. It was a blunder, a huge blunder. I don't know when we'll have another chance for Single Payer. I suspect, that as I predicted ten years ago, America will have Single Payer and it will have a Republican signature on it. Good job Obama.

Meanwhile, Obama and the Democrats are working on the destruction of all of our social welfare systems because they are inexplicably promoting amnesty for illegal aliens which is a de facto open border with Mexico.

How can you defend these people? Oh , that's right, Ezra, I forgot.

Posted by: David Hearne | May 22, 2013 11:27:55 AM

Ezra, I hope you are right, but I see a lot of legs.

Posted by: Monrocsol | May 22, 2013 11:34:33 AM

It's too early to tell what role the administration had in each case (the AP scandal is probably more direct because of the AG office role). No, the real danger is yet more partisan polarization that veers into grasping point scoring and endless media feeding frenzies. If you're worried the govt. might not come out smelling like roses, you're about 200 years too late. I also doubt the Republicans will have the skills necessary to turn this into a general rant against welfare or other programs.

Posted by: anon | May 22, 2013 11:37:41 AM

Good piece. The comparisons to Watergate that some of my colleagues in the media are making are ludicrous. Watergate was a burglary ring run out of the Oval office.
The real danger with the IRS scandal is it gives credibility to the Tea Party wingnuts, and will encourage them to vote next year.

Posted by: Hank Plante | May 22, 2013 11:39:57 AM

groups in this country are welcomed to proclaim political opinions. the precise moment they choose to promote a particular candidate or political party with those opinions, they should no longer be tax exempt.

it's one thing to stand on one side of a social issue, it's another to voice support for an individual candidate or political party in order to reach those goals. the line is clear, there for a reason, and once it's crossed, you pay taxes.

this one is simple.

Posted by: northalabama | May 22, 2013 11:42:58 AM

Please. Using the IRS to go after political opponents is textbook politics 101. The Obama administration got caught doing what pretty much every other administration has done. No need to be sanctimonious or hypocritical by anyone, Democrat or Republican.

And of course the president 'knew nothing' about the shenanigans; that's why there's this concept called political appointees [i.e. hacks] who do the desired dirty work while those at the very top keep their hands ostensibly clean. Good grief.

Hope and change. Good one. Say hello to the new boss. Same as the old boss.

Posted by: ratbastard | May 22, 2013 12:20:07 PM

Why are you nor the MSM mentioning that liberal groups were also under added scrutiny. And they all should be. Tax-free should be limited to groups with no political activity whatsoever.

Posted by: Terry House | May 22, 2013 1:41:06 PM

Ari, On the IRS, isn't it true that, while SCOTUS's Citizens United decision hugely expanded the number and type of tax-exempt political organization, Congress provided no new mechanism for granting that exemption, except for the old determinations of the IRS? The huge expansion of political tax-exempt organizations that, unlike other TE orgs, don't have to file 990s and, despite being free of tax, do not have to demonstrate the justification for them to be tax-exempt--unlike, say, charities, universities, museums, libraries and other 501(c)3's. It's a scandal that no one pays attention to--until yesterday I guess: the Democrats are asking for better regulation, http://www.reuters.com/article/2013/05/21/us-usa-irs-groups-idUSBRE94K19520130521

Posted by: Palamane | May 22, 2013 2:22:39 PM

There is an irony in the IRS thing. You have to acknowledge that those groups are political and right-leaning in order to claim there is a scandal. But acknowledging that demonstrates that these are political groups and not social welfare groups and they shouldn't have tax exempt status in the first place.

Either way, the media has cried wolf too many times about scandals, bombshells, whatever that no one even cares about these things besides the people who didn't and wouldn't vote Democratic.

Posted by: David | May 22, 2013 4:01:23 PM

Old news?

Posted by: Gary | May 22, 2013 7:49:51 PM

Um. I'm hearing that everything happened through Cincinnati, not Cleveland. Do you know something I don't?

As long as the tax system is structured to favor some and disfavor others, then it will be corrupt.

Get rid of the entire tax code. Individuals pay only a sales tax, on EVERYTHING. That way everyone really is a taxpayer; everyone has a stake and an interest. Corporations pay a flat 15% regardless of where it's made, who counts it, where it sleeps, or what state they are incorporated in.

Churches, clubs, institutions, and political organizations would be treated like individuals paying sales tax on all the goods and services they purchase.

Posted by: David Hearne | May 23, 2013 1:57:55 AM

Besides another media frenzy and GOP cry of scandal, I can't get worked up about this one. Let's see, we have thousands of new groups popping up who's sole premiss is not wanting to pay taxes, they set up groups using special loopholes and lawyers counsel to cheat the system while doing exactly what they pretend they are not, then cry when the agency they are cheating asks them extra questions to prove they are entitled to those exemptions.

It's like the christians crying they are the ones being discriminated against. It's not unfair when common sense dictates you're doing what we all know you are actually doing, or 9 out of 10 of you are. Or does anyone here actually believe these Tea party groups were not political?

Posted by: Michaelandfred | May 23, 2013 12:52:16 PM

Government can indeed do good things, but it is unrealistic to imagine that there will never be mistakes or instances of poor judgement. To suggest that such errors invalidate government's role in effecting social well-being is an infantile argument. All that being said, I am with many of those posters who have no problem with what the IRS did. They didn't strictly target conservative organizations. They simply exercised appropriate scrutiny of organizations that were organized under IRS codes for nonprofit groups. Politically active groups do not qualify for a tax exemption, and the groups targeted are unquestionably involved in political activities.